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Satisficing in sales competition: experimental evidence

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Author Info

  • Berninghaus, Siegfried K.

    () (Universität Karlsruhe)

  • Gueth, Werner

    () (Max Planck Institute for Research into Economic Systems, Strategic Interaction Group)

  • Levati, M. Vittoria

    () (Max Planck Institute of Economics, Strategic Interaction Group)

  • Qiu, Jianying

    (Max Planck Institute of Economics, Strategic Interaction Group)

Abstract

In a duopoly market, aspirations express how much sellers want to earn given their expectations about the other's behavior. We define individually and mutually satisficing sales behavior for given individual beliefs and aspirations. In a first experimental phase, whenever satisficing is not possible, beliefs, aspirations, or sales have to be adapted. In a second phase, testing the absorption of satisficing, participants are free to select nonsatisficing sales profiles. The results reveal that most people are satisficers who, either mandatorily or deliberately, tend to adjust aspiration levels if they cannot be satisfied.

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Paper provided by Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim in its series Sonderforschungsbereich 504 Publications with number 07-03.

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Length: 29 pages
Date of creation: 16 May 2007
Date of revision:
Handle: RePEc:xrs:sfbmaa:07-03

Note: Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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  1. Huck, Steffen & Muller, Wieland & Normann, Hans-Theo, 2001. "Stackelberg Beats Cournot: On Collusion and Efficiency in Experimental Markets," Economic Journal, Royal Economic Society, vol. 111(474), pages 749-65, October.
  2. Drew Fudenberg & David K. Levine, 1998. "Learning in Games," Levine's Working Paper Archive 2222, David K. Levine.
  3. Simon, Herbert A, 1979. "Rational Decision Making in Business Organizations," American Economic Review, American Economic Association, vol. 69(4), pages 493-513, September.
  4. Roy Radner, 1975. "A Behavioral Model of Cost Reduction," Bell Journal of Economics, The RAND Corporation, vol. 6(1), pages 196-215, Spring.
  5. Youngse Kim, 1999. "Satisficing and optimality in 2þ2 common interest games," Economic Theory, Springer, vol. 13(2), pages 365-375.
  6. Lilly, Gregory, 1994. "Bounded rationality : A Simon-like explication," Journal of Economic Dynamics and Control, Elsevier, vol. 18(1), pages 205-230, January.
  7. Werner Güth & Gerlinde Fellner & Ev Martin, 2006. "Satisficing or Optimizing? - An Experimental Study," Papers on Strategic Interaction 2006-11, Max Planck Institute of Economics, Strategic Interaction Group.
  8. Jonathan Bendor & Dilip Mookherjee & Debraj Ray, 2001. "Reinforcement Learning in Repeated Interaction Games," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 0(1), pages 3.
  9. Holt, Charles A, 1985. "An Experimental Test of the Consistent-Conjectures Hypothesis," American Economic Review, American Economic Association, vol. 75(3), pages 314-25, June.
  10. Napel, Stefan, 2003. "Aspiration adaptation in the ultimatum minigame," Games and Economic Behavior, Elsevier, vol. 43(1), pages 86-106, April.
  11. Aumann, Robert & Brandenburger, Adam, 1995. "Epistemic Conditions for Nash Equilibrium," Econometrica, Econometric Society, vol. 63(5), pages 1161-80, September.
  12. Werner Güth & M. Vittoria Levati & Matteo Ploner, 2006. "Is Satisficing Absorbable? - An Experimental Study," Papers on Strategic Interaction 2006-10, Max Planck Institute of Economics, Strategic Interaction Group.
  13. Gerlinde Fellner & Werner Güth & Boris Maciejovsky, 2005. "Satisficing in Financial Decision Making A Theoretical and Experimental Attempt to Explore Bounded Rationality," Papers on Strategic Interaction 2005-23, Max Planck Institute of Economics, Strategic Interaction Group.
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Cited by:
  1. Werner Güth, 2009. "Optimal gelaufen, einfach zufrieden oder unüberlegt gehandelt? Zur Theorie (un)eingeschränkt rationalen Entscheidens," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 10(s1), pages 75-100, 05.
  2. Mariana Blanco & Dirk Engelmann & Alexander Koch & Hans-Theo Normann, 2010. "Belief elicitation in experiments: is there a hedging problem?," Experimental Economics, Springer, vol. 13(4), pages 412-438, December.
  3. Werner Güth & M. Vittoria Levati & Matteo Ploner, 2008. "Satisficing in strategic environments: a theoretical approach and experimental evidence," Jena Economic Research Papers 2008-078, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  4. Werner Güth, 2007. "A Non-Bayesian Approach to (Un)Bounded Rationality," Jena Economic Research Papers 2007-035, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.

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